Saturday, December 31, 2011

Wish you a Happy New Year

My wish for 2012: May this year bring good fortune to all Restaurant Entrepreneurs. We need to turn the statistics upside down - From over 90% of new restaurant businesses failing within the first year to over 90% of new restaurant businesses succeeding within the first year. 

Tuesday, December 20, 2011

Kitchen Area in a Restaurant

While designing a restaurant space, the normal tendency would be to maximize the number of "Covers" (industry term for seats) and minimize the space required for the kitchen area. What exactly is included when we use the term "Kitchen area" in a typical restaurant.

1) Cooking area - This means the area used for preparing the food - large commercial gas burners, tandoor, grill etc. depending on your cuisine.
2) Work tables adjoining the cooking area for preparing and keeping the final cooking ingredients ready. This could include veggies & meat cut appropriately, sauces, spices etc.
3) A Wash area that can be used for washing the cooking utensils & accessories and another wash area for serving dishes (plates, spoons, forks etc. - cutlery, crockery). In small restaurants, the wash areas for both tend to be combined.
4) A Small Store area - This is a dry area used to store the most commonly used provisions in the kitchen. Even if the restaurant has a separate larger store, the kitchen will need a small store or atleast a few storage shelves.
5) Pantry Area - This is the area where the juices, desserts, maybe even salads and other items which do not need cooking, are prepared.
6) Food Pick-up tables - Generally, you have a small table which is used to assemble the dishes to make it easy for the server/steward to come and pick-up the items and take them for serving to the customers.
7) Preparation Area - This could be an area used to cut meats, maybe have a grinder for grinding flour etc. In small restaurants, the same work table area is used for this. This would depend on your cuisine.
8) Staff Toilet Area: This, in my opinion is critical and a very basic need you need to provide for. A number of small restaurants do not provide this and you can see the kitchen staff using the customer toilet area.
9) Staff Changing Area: A small area for the staff to change to their work uniforms/dresses and hang their clothes and keep their personal belongings.
10) Space for keeping clean cutlery and crockery: This area can be provided for adjoining the kitchen or within the customer area in the form of "Side Tables" - The next time you go to a restaurant, you can see small shelves used to store plates, spoons, forks etc. Providing a space for keeping clean water glasses is also critical as these tend to be fragile and if you do not provide for it, you will end up with lots of breakage.
11) An area where the used cutlery, crockery and glasses can be kept for washing - This is a small area where the steward / clearing boy can leave the used the plates, cutlery and glasses for the washing staff to take and clean.

If you include all of the above, you will probably need 400-600 sft even for a small restaurant kitchen. Again, the exact space requirements would depend on the concept/cuisine. So please use the above as a broad guideline for the kind of space you would need.

Monday, December 12, 2011

Key Non Product/Concept Components to starting a Restaurant Business

I have already provided the below information as a combination in a few posts, but I keep getting several email queries asking the same questions. So I have tried to summarize the key activities involved in starting a restaurant - here I am talking about the activities outside of the main concept, interiors and the product/menu design etc. 
  1. Company Registration - Any accountant/accounting firm will help you with this. You can register the company as a propreitership (easiest, but the firm and you are the same from a legal perspective), Partnership firm (minimal paperwork and minimal ongoing statutory requirements) or a as a Private limited company (reasonable paperwork and costs to set-up and reasonable ongoing activities). LLP is also a new option you can consider. Out of the lot, I would recommend the "Partnership Firm" approach - delinks you (the individual) from the company, gives it a more formal feel and the paperwork/costs involved are minimal both during set-up and on an ongoing basis. Plus if you accountant can help you plan your taxes creatively, you may be able to save some money by paying lower taxes on the profits you make through the presumptive income based model available for small businesses with revenues upto 50 lakhs per annum. Again, I am not a CA or a tax/accounting expert. I would recommend that you talk to your trusted accountant and if you don;t have one talk to 2 or 3 accountants and pick the one you are comfortable with. 
  2. Permits / Licence Procurement - Once you find your location, these are not as difficult as it seems - it will just cost you money. So don't worry too much about it, unless you want to serve alcohol, in which case you will need to figure out the way to get the permits/licenses for this earlier. For the standard licenses, your local corporation office and your accountant can help you get all of those. See my post on licenses required for a restaurant business for details. 
  3. Financials / Funding - For a restaurant business startup, it will have to be your own money with some support from friends/family. You can get a loan from a bank for property as collateral - Loan Against Property - most banks have a scheme for this. Here you mortgage your property for the loan - in the event you cannot repay the loan, the property will become the bank's and they will dispose it off to recover the loan amount. Working Capital Loans are not typically not available for new businesses. Let's say you have 3 restaurants operational for the last 4 years and your bank has a record of all your business transactions for the last 4 years with them. Based on this history, they may give a working capital loan / overdraft facility. The interest rates for commercial loans are currently in the 14-18% per annum range. I would suggest that you go and talk to the branch manager at the bank where you have your personal account - they will be able to provide you specific details on what options you can avail of in your situation. When you determine the total investment you need, I would strongly urge you to include working capital requirements for the first 3-6 months in your total investment figure, as you will need that time to build your business to an operational break-even level. So you need to have the funds ready to sustain your operational expenses for the start-up period. 
  4. Location Search - It is worth hiring a good broker for this once you determine the kind of place you are looking at. You can also drive around, call the numbers from the To Let boards. 
  5. Staff Hiring / Training - Staff hiring will be a painful part. The main guys you hire should be able to bring in the rest of the team, but getting the main guys will be the challenge. You can request an existing restaurant business owner to help you find someone good. If you are looking at a reasonable investment (say 25K per month + salary), then, Monster etc. may be a potential source for finding the key staff. Training is not established in this space - There are some consultants who can do some form of training. The main guy you hire should be able to help you train the staff initially.

Sunday, December 4, 2011

Formal Research Report on the Indian Restaurant Industry

I recently met with Samir Kuckreja,  the current President of the National Restaurant Association of India (NRAI - Samir is also the MD & CEO of Nirula's ( - India's own McDonald's. He shared several industry insights and also gave me a copy of the white paper that NRAI released in 2010 on the Indian Restaurant Industry - probably the first formal documented research of this scale in India. This is really an excellent & comprehensive market research report - calling it a white paper does not do justice to the content available in the report. I will share key highlights of the white paper in a few future posts - want to get a formal approval from NRAI before doing so.

Interested Readers can purchase a copy of the NRAI White Paper on the Restaurant Industry for a fee of Rs.500/- for Delhi and Rs.600/ for outstation. The payment can be made in cash or cheque drawn in the favor of National Restaurant Association of India. The correspondence address is
National Restaurant Association of India
4th floor, Phase-1, PHD House, 4/2 Siri Institutional Area,
August Kranti Marg, New Delhi-110016
Main Line: +91 11 4100 0967 Fax: +91 11 2653 6053
Contact: Shilpi Varshney
Marketing and Communications

Meanwhile, here are some press releases that provide a very high level summary of the research report. All these links are also available on the NRAI website -